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Recent research from the Association of Investment Companies suggests that 78% of investors plan to make use of their ISA allowance this year. 40% plan to use only the shares element , representing a 1% rise since last year, while just over a quarter plan to use both their cash ISA and investment ISA allowance, again representing a 1% increase on the previous year. more

A recent survey conducted by NS&I indicates that the demographic of ISA savers has undergone quite a few changes in recent years. A survey of over 1,200 UK adults revealed some interesting insights into the behavior of savers in the past few years. more

ISA investors snap up new allowance

22 April 2010 / by Lois Avery

Savers have been rushing to make the most of the new ISA allowance despite low interest rates, says moneysupermarket.com.

The new tax year has just begun and data from the price comparison website has revealed that the new ISA rules are proving popular with consumers, with the site experiencing a 34 per cent increase in savings traffic during the first few days of ISA season, compared with the same time last year.

This means that despite the historically low base rate, at just 0.5 per cent, savers are still keen to find a good home for their money.

The new allowance came into force on April 6 and has given consumers an increased ISA limit of £10,200, of which £5,100 can be invested in a cash ISA.

Kevin Mountford, head of banking at moneysupermarket.com, said: “Making the most of your money is more important than ever when rates are struggling against inflation.

“Although this year, the rates on offer have been lower than we would have hoped, with very little movement expected in the market, savers would be better off taking out a product now to start accruing the interest immediately rather than waiting for a better deal at a higher rate. The large volume of traffic we have seen in April, suggests many savers have the right idea.”

Discount broker Willis Owen has also enjoyed its busiest start to a tax year since 2007 with a 24 per cent increase in the amount invested in ISA funds compared to the start of the 2007/08 tax year.

Figures from Willis Owen also show that a third of investors who have opened an ISA since 5 April 2010 have used the full £10,200 allowance.

Alan Easter, Director of discount broker Willis Owen, said: “Investors know that tax rises are on the way whatever party forms the next Government. So those with the cash to invest now are right to secure the full ISA allowance as soon as possible.

"The early birds are also looking for an income from their investments. With returns still relatively low on the high street it is no surprise that savers are looking for an alternative home for their money. The key advantage of holding funds within an ISA is that the income generated is not taxed. If you are looking to boost your monthly earnings or top up your pension an ISA really is a great way to save and invest. “

The Schroder Monthly High Income Fund aims to generate a high income, whilst not compromising capital, by investing in a diversified basket of fixed income securities. 100% Discount off Initial Charges.

Popular monthly income fund that aims to achieve a high level of income whilst seeking to maximise total return through investing in high yielding corporate and Government bonds, together with UK equities. 100% discount on initial charges.

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The Jupiter Corporate Bond aims to achieve a high level of income with the opportunity for capital growth, through mainly investing in fixed interest securities. Income is paid to you twice yearly. 87.5% Discount off the Standard Initial Fund Charge.

One of the UK's most popular income fund ISAs the Invesco Perpetual High Income has delivered consistently good long term returns through a variety of market conditions. Income is paid to you twice yearly. Up to a 100% Discount off the Standard Initial Fund Charge.

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* See details.†† Income payments are dependent upon the FTSE 100 Index.

The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.

Structured investment plan with the potential to mature after years 1, 2, 3, 4, 5 or 6. If the plan matures early it will return 9.35% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer.

Structured investment plan with the potential to mature after years 3, 4, 5 or 6. If the plan matures early it will return 6.85% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer.

Capital protected deposit plan with the potential to mature after years 3, 4, 5 and 6. If the plan matures early it will return 4% times the number of years the plan has been in force. Also available for Cash ISA and ISA transfer.

The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.

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The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.